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Fundamental analysis and technical analysis are the two skills that every investor should know for successful trading. Although they differ from each other yet they are equally important to learn as these indicators help stock market traders to get full insight into the stock.
Fundamental analysis is the study that directly affects a company’s potential value. This includes both macroeconomic and microeconomic factors as well as strategic planning, employee relations and supply chain.
Technical indicators also known as technical's are used to see the past trends of stock and to anticipate the future price of a stock. Technical indicators have nothing to do with the basics of a company such as earnings, revenue, profit margin. The examples of technical indicators are relative strength index, moving averages and stochastic oscillators.
A technical indicator’s objective is to financial forecast direction. This can be achieved by calculating by historic price, volume and open interest information. Technical indicators are basically used to plot a chart pattern which in turn is used to predict the trend of the stock market. Technical indicators help analysts to predict the future price of the stock by looking at its past performance.
Here, we are outlining the top 5 technical indicators every stock market investor should know:
The relative strength indicator helps analysts to identify momentum, market conditions and warning signals for risky price movements. RSI is classified as a momentum oscillator which tells a figure between 0 to 100. Here, momentum is the rate of the rise or fall of a stock price. An asset which is around 60-70 level is considered as overbought whereas an asset near 30 is considered as oversold.
Research analysts said that RSI is one of the most reliable indicators to ascertain accumulation and distribution phase. Also, it is helpful to measure the strength of the ongoing trend of stocks.
Moving Averages or Simple Moving Average is one of the oldest and widely used technical indicators that is used to identify the direction of the current price trend without interrupting the short term price strike.
The formula of Moving Averages is the combined price points of a financial instrument over a specific period divided by the number of data points to present a single trend line. There are three types of Moving Averages: Simple moving average (SMA), exponential moving average (EMA) and weighted moving average (WMA).
Generally, common periods for moving averages are 10 days, 21 days, 50 days, 100 days and 200 days.
The indicator aims at providing a range within which the price of an asset generally trades. Also, Bollinger bands clearly reflect the volatility by increasing and decreasing the band.
Bollinger bands consist of a set of three band curves drawn that are expected to tell the security prices.
The primary function of the indicator is to provide a relative definition of high and low. As per the definition, the prices are high at the upper band and low at the lower band. The narrower the bands with each other, the lower the perceived volatility of the financial instrument. Conversely, the wider the bands, the higher the perceived volatility.
Bollinger Bands are useful for recognizing an asset, for instance, when an asset is trading outside the upper parameters of the band, it can be overbought or vice versa.
MACD is one of the widely used technical indicators to date. It detects the momentum of a stock by comparing two moving averages. It assists traders to identify buy and sell opportunities around resistance and support levels.
When two moving averages come together, it is known as Convergence, on the other hand, if they are moving away from each other, it is known as divergence.
The MACD line is used to compare the short term and long term momentum of stock so that analysts can identify its future direction. When the short term momentum line crosses the long term line, it clearly gives a sign of future stock activity. When the short term line crosses and surpasses the long term line, the stock will trade higher.
ADX is used to measure the trend strength as it helps investors to quantify the strongest zone and increases the opportunity of building aggressive positions.
It works on a scale of 0 to 100, where a reading of increasing ADX value above 25 is considered as a strong trend while a value above 50 indicates exhaustion of a move where a number below 25 is considered a drift.
Analysts use this information in order to collect the data on whether the trend is going upward or downward.
The foremost thing to remember to use trading indicators is that you should never use too many indicators at once nor in isolation. For better results, it is advisable to use a few indicators as they are best suited to what you are trying to achieve.
It is important to clearly monitor a signal for the best stock’s performance. For instance, if you are receiving a buy signal from an indicator and sell a signal from another indicator, then you have to use different indicators until your signals are confirmed.
Like all other countries, Indian investors also have a strong home bias – all their investments will be in India. But there are many opportunities for investments outside of India as well. Further, some global markets have done very well so it is worth exploring investment opportunities outside India too.
In the past, the lack of international exchange-traded funds (ETFs) and mutual funds made global diversification difficult for the average investor, but these days, with lots of opportunities there’s no excuse for the so-called “home bias”.
According to the International Monetary Fund (IMF), in purchasing power parity (PPP), terms in the world’s GDP India contributes only 7.98%, which clearly shows Indian investors have little participation in the overall world’s economic growth.
Two of the major reasons why people invest in international investments and investments with some international exposure are:
International investing might help the investors to spread their investment risk among different foreign companies and markets in addition to different companies and markets.
In emerging markets. It takes advantage of the potential for growth in some foreign economies.
Here, we’ll take a look at how the average investor can build a globally diversified portfolio...
International Funds invest in all countries exceptional of the country in which you reside. while Global Funds invest in all countries around the globe with no exception.
ETFs are a collection of securities that tracks an underlying index such as stocks, however, they can invest in different sectors.
Investors can choose between many different types of mutual funds or ETFs, including:
There are numerous funds which are dedicated to investing in offshore assets, with some devoted to themes such as commodities, EMs, Global smaller cap companies, Debt mutual funds, National Pension Systems, Public Provident Funds, Bank fixed deposit, Senior Citizens' Saving Scheme, Real Estate, Gold. etc. Along with them, there are equity funds that invest the majority of their assets in Indian shares, while also investing a trivial part of their portfolio in global listed equity. The investor’s fear of the risks while investing abroad is about the asset’s level of volatility – that is, how widely its price differs over time. There is currency risk which restricts the changes in the exchange rate against the investor’s home currency. Investors should study qualitative risk factors – like geopolitical risks and bond ratings, and political risk can have serious effects on a nation's economy.
Offshore investing is an attractive idea, given the ease and the low cost through which it can be done through mutual funds. Additionally, it also includes diversification as well as provides access to some of the best-performing companies in the world. Let’s have a look at the other benefits involved in investing globally.
People want to invest in the companies of their choice such as Apple, Facebook, Amazon, etc.
Investing globally helps in diversification. It can reduce the risk in your portfolio as the locals might not have a reasonable effect on the international markets.
There may be better and more profitable opportunities available in international markets.
Many international countries offer attractive tax incentives to foreign investors in order to attract their wealth.
Investing internationally gives a bigger benefit for more growth which also means an increase in return potential in overseas investments.
Many foreign financial institutions are able to protect your investments from confiscation and other threats. They are also concerned with confidentiality regarding your finances.
Market-linked investments have the potential of high returns but they carry high risks as well. Fixed-income investments help in accumulating the accumulated wealth in order to meet the desired goal there are some investments that are fixed-income while others are financial market-linked. Both fixed-income and market-linked investments play a major role in the process of wealth creation.
IPOs are on the boom and many companies want to go public. In CY20 we saw many companies got listed and generated wealth for the investors. In 2017, we saw companies going public in bulk, and yet again in 2021 we expect the same trend will continue with many well-known companies trying to go public. In the few months, we may see few companies getting listed such as Kalyan Jewellers, Suryoday Small Finance Bank, ESAF Small Finance Bank, Nazara Technologies, RailTel Corporation, Sigachi Industries, Heranba Industries, Antony Waste Handling Cell, Mrs Bectors Food Specialities, Indigo Paints, Nureca and Stove Kraft. We recently saw Burger Kings subscribe 157 times which suggests that there will be demand for fundamentally sound companies. Along with the above-stated companies, there are few other companies on which we should keep an eye.
Life Insurance Corporation of India which is abbreviated as LIC is an Indian state-owned insurance group and investment corporation owned by the Government of India. LIC was founded on 1st September 1956 under the LIC act 1956. LIC started its operations with 5 crores which have now reached 31 lakh crore. LIC currently has 8 zonal offices, 113 divisional offices, 2,048 branch offices, and 12 lakhs+ agents which are present in 14 countries.
LIC IPO is a dream come true for many investors which might go public in 2021 which will be one of the biggest IPO in the Indian market. It is expected that it would hold the same limelight as Aramco IPO. Deloitte has been fixed as the pre-initial public offer (IPO) transaction advisors and it is expected that LIC will sell up to 10% of the stake in the IPO and IPO size is expected to be in between Rs. 80,000 crore to Rs. 1 lakh crore.
National Commodity & Derivatives Exchange Limited which is abbreviated as NCDEX is an online commodity exchange based in India. NCDEX is the leading agricultural commodity exchange in India which was incorporated on 23rd April 2003. NCDEX has offices in Mumbai, Delhi, Ahmedabad, Indore, Hyderabad, Jaipur, and Kolkata. NCDEX’s network comprised 380 members, 13,316 terminals, nine WSPs, 12 clearing banks, 41 financial institutions, and 246 FPOs representing 461,619 farmers, thereby encouraging a virtuous cycle, as of September 2019.
NCDEX would be the third exchange to get listed in the Indian Stock market after BSE and MCX. NCDEX is expected to launch its IPO in CY 21 and the IPO size is expected to be around Rs. 500 crore. ICICI Securities Limited and SBI Capital Markets Limited has been fixed as the lead manager to handle the IPO.
National Securities Depository Limited abbreviated as NSDL is an Indian central securities depository headquartered in Mumbai which was established in August 1996. NSDL has 276 depository participants in its network through which it provides depository services to the investors, custodians, issuer companies, stockbrokers and stock exchange.
NSDL would be the second depository to get listed on the exchange after CDSL. Currently, NSE and IDBI bank hold 24% and 30% stake in the company. It is expected that IPO size might be of Rs. 1000 and the promoters might sell up to 30% stake in the company.
Barbeque Nation is one of the fastest-growing casual dining restaurant chains in India. Barbeque Nation was originally incorporated as Sanchi Hotels Private Limited on October 13, 2006, at Indore, Madhya Pradesh by one of its promoters. Barbeque Nation has around 138 outlets across India and 7 outlets in the UAE, Oman, and Malaysia.
The IPO might comprise an OFS of 98,22,947 shares and a fresh issue of Rs. 275 crore as per the draft papers filed with the SEBI. It is expected that the IPO size will be approximately Rs. 1000 crore to Rs. 1200 crore and will be managed by IIFL Securities, Axis Capital, Ambit Capital and SBI Capital Markets.
In CY we saw there was a high demand for good IPO such as Happiest Minds, Mazagaon Dock and Burger Kings. It is expected the demand will boost further next year in the fundamentally sound IPO. We suggest the investors keep an eye on quality companies and bet for them in the IPO.
We all have some desires in life and we work hard to fulfill them at any cost, sometimes it takes less time to achieve them. But how it can be done, you cannot plant money on trees we all need to work to earn.
But human nature desires keep on increasing with the span of time and along with desires earning should need to be increased. In this time of inflation, an individual always thought of how to save his money from unnecessary expenditure, but in this is life anything can happen which makes a difference in a very small time.
One should plan everything in a systematic manner where the unplanned event won't harm his earnings. Though still some of us take more time to decide what can be done to avoid all such events. Many often we never discuss how we can plan our money to invest in such a manner where regular earning can be generated along with we will be able to face inflation too.
Our parents and grandparents always suggested investing in those traditional instruments which take a lot of time to grow and sometimes it is hard to keep them with us. But at last, we need to follow what our mind says.
" I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful" Warren Buffet.
One should be ready to invest when the market is down and come out when it's on highs.
Here are some important benefits we get when we invest in the stock market.
The stock market investment will give long term benefits which prevent our wealth from the impact of inflation.
As compare to other financial instruments buying & selling of stocks are easier and in a convenient manner.
When the economy is on a growing stage, earnings of the corporate also increased, therefore if purchased any good quality company, benefits are there in terms of quality returns.
It is not easy to start any business which we think of, but just because we like it we can become a partial owner of that. After purchasing shares of any of our favorite businesses we get the right to vote and we become a partial owner of it.
Along with the growth in the share prices companies also providing additional benefits in the form of dividends which is actually a part of sharing from the profit that the company earns in a financial year.
सप्ताह के अंत मे डॉलर इंडेक्स मे निचले स्तरों से उछाल आने के कारण कीमती धातुओं मे ऊपरी स्तरों पर बिकवाली का दबाव बनता दिखा लेकिन सप्ताह मे सोना बढ़त के साथ बंद हुआ है। सोने के भाव सप्ताह मे 2 प्रतिशत तेज़ हुए जबकि चाँदी के भाव 0.5 प्रतिशत की मामुली गिरावट पर रहे है।
अमेरिकी कांग्रेस की तरफ से जल्द ही तीसरा कोरोना वायरस राहत पैकेज आने की उम्मीद मे कीमती धातुओं के भाव को सपोर्ट मिला हुआ है। मुद्रास्फीति बढ़ने पर अधिक पैसा छापना हमेशा कीमती धातुओं की कीमतों को बढ़ाने के लिए एक प्रमुख घटक रहा है।
फेडरल रिजर्व द्वारा महामारी से प्रभावित अर्थव्यवस्था की मदद के लिए और अधिक बॉन्ड खरीदने के कदम, कीमती धातुओं के लिए सकारात्मक है। अमेरिका से राहत पैकेज मिलने की उम्मीद मे निवेशकों द्वारा कीमती धातुओं मे निवेश का रुझान बरक़रार है।
अमेरिकी फेडरल बैंक के प्रति माह कम से कम 80 बिलियन डॉलर और प्रति माह 40 बिलियन डॉलर की एजेंसी बंधक-समर्थित प्रतिभूति खरीदने के लिए फेड का निर्णय, अमेरिकियों को अधिकतम रोज़गार और अर्थव्यवस्था को स्थिरता प्रदान करने के लिए है। डॉलर इंडेक्स मे लगातार गिरावट जारी रहने से रुपय मे मजबूती बनी हुई है जिससे घरेलु वायदा बाजार मे सोने की कीमतों मे ऊपरी स्तरों पर दबाव देखा गया है।
कीमती धातुओं के फंडामेंटल मजबूत है लेकिन इस सप्ताह क्रिसमस हॉलिडे के चलते कीमतों मे ऊपरी स्तरों पर दबाव रह सकता है। कॉमेक्स वायदा सोने मे 1900 डॉलर पर प्रतिरोध है और 1850 डॉलर पर सपोर्ट है। फरवरी घरेलु वायदा सोने मे 50700 रुपय पर प्रतिरोध और 49000 रुपय पर सपोर्ट है। चाँदी मे भी ऊपरी स्तरों पर दबाव रहने सम्भावना है। और इसमें 67000 रुपय पर सपोर्ट तथा 68500 पर प्रतिरोध है।
Nifty & Sensex are rejoicing at a new all-time for the sixth consecutive week on the back of global liquidity.
Wow! It was the seventh consecutive week when the Indian equity market ended with gain whereas it was a sixth consecutive week where Nifty and Sensex ended at new heights. Nifty hits high of 13772 whereas Sensex hit a high of 47026 and they both ended with a weekly gain of around 2%. If we talk about last week’s outperformer then Pharma and IT sector lead the rally where the Nifty Pharma index gained 3.21% and the Nifty IT index gained 2.61%.
The most important question is what is propelling such a stellar rally in the market. So the answer in one word is “liquidity”. Yes, it is the liquidity that is causing rally across all asset classes whether it is Equity, Gold, Silver, Crude Oil, Metal, and even Bitcoin which has crossed the $20000 mark for the first time in history.
There was a US fed meeting last week where they kept interest rates unchanged which is near to zero and raised US GDP forecast to 4.2% from 4% but the main outcome of the meeting was the speech of Fed chairman Jerome Powell where he says that interest rates will continue to remain low and Fed will continue its bond-buying program to infuse liquidity in the system which is the reason for bullish trend got further momentum.
If we analyze the data then FIIs who are the main drivers of this rally bought Rs. 11804Cr while DIIs are still in the selling mode who sold Rs. 11023cr last week.
If we talk about the F&O data then FIIs’ long exposure in Index future stands at 68% vs 77% last week while PCR is trading at 1.62 level which is a comfortable level but once it had reached to 1.89 marks last week that’s why we saw a profit booking in the first half of Friday’s trading session.
Nifty is in strong bullish momentum but 13770-13820 is an immediate resistance zone where it can see some supply pressure above this 13873/13985 will be the next resistance levels. On the downside 13650 will be an immediate and key support point because below 13650, there will risk of profit booking towards 20-DMA of 13300 where 13500 would be an intermediate support level.
Banknifty is facing resistance in supply zone of 30800-31000 where 30200-30000 is an immediate and critical demand zone; below this, there will be a risk of any serious profit booking where 29000 will be the next important support level while if it manages to take out 31000 levels then we can expect a rally towards 31500/32000 levels.
Important cues for the Next Week:
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